A House of Lords Committee has today repeated its concerns over the proposals for a financial transaction tax, following the decision by the European Court of Justice to dismiss a legal challenge to the tax by the UK Government.

In April of last year the UK Government launched a legal challenge to annul the European Council’s decision to use the enhanced cooperation procedure to set up a Financial Transaction Tax (FTT). Today the Court of Justice of the European Union (CJEU) has rejected the UK’s case, although it has made clear that it is not a judgment on the legality or otherwise of the FTT proposal itself.

The House of Lords Economic and Financial Affairs EU Sub-Committee has today repeated its concern over the tax.

Commenting on the CJEU decision, Lord Harrison, Committee Chairman, said:“The Court of Justice’s decision today is clearly a blow to the UK’s objections to an FTT. Whether it is a mortal blow remains to be seen. The Government are confident that the decision indicates only that the legal challenge was premature, and that any future challenge against an FTT proposal agreed by EU participants would still have a chance of success. Time will tell if their confidence is justified.

In the meantime, my Committee will keep a close watch on events. Notwithstanding the evident divisions between EU colleagues who are pressing ahead with the FTT, they remain determined to reach agreement on it in some shape or form. We stand by our view that an FTT taken forward by a minority of EU states poses a serious threat – not only to the interests of non-participants such as the UK, but also to the interests of the EU as a whole. The FTT remains very much ‘alive and deadly’.

While we supported the Government in their legal challenge, we remain puzzled why they did not vote against the authorising decision in the first place. Today’s developments reinforce the point that we have consistently made - that the Government must remain engaged with the debate, and be ready to bring a further legal challenge if necessary, if our arguments are to win the day."